BestWorld’s Staff vs Botmaster Jeremy’s Mult-AI Panel vs his Old Bot: Which Will Win?
Summary of all our current Sept. FED rate cut forecasts: Today’s Multi-AI Panel answer is 25% likely, way down from 58% on Aug. 20. Old Bot today is 47.5%, steady since yesterday. We humans remain steady at 80%.
[Old Bot] Rationale: The likelihood of the US Federal Reserve cutting interest rates in September 2024 is generally viewed as moderate to low, primarily due to prevailing high inflation rates and strong employment figures. Historically, the Fed adjusts rates based on economic conditions, but current data suggest maintaining or potentially increasing rates to manage inflation. While market speculation and some recent economic indicators hint at the possibility of a cut, official statements and predictions, such as those from the CME Group’s FedWatch tool, present mixed probabilities. Overall, given the Fed’s data-dependent approach and current economic stability, a September rate cut appears less probable unless significant economic deterioration occurs.
More about our staff vs bots competition here.
Our staff forecasts below:
Welcome to the Multi-AI Panel Discussion, Round 1
[Moderator]: What is the probability that the US FED will cut interest rates in September 2024?
[Claude]: Thank you, Moderator. As of August 2024, I believe the probability of the Federal Reserve cutting interest rates in September 2024 is relatively low, perhaps around 20-30%. This assessment is based on several factors we’ve observed over the past year.
Firstly, inflation has been stubbornly persistent, albeit showing some signs of moderation. The Fed has maintained a cautious stance, emphasizing the importance of seeing sustained progress towards their 2% inflation target before considering rate cuts. While we’ve seen improvements, it’s unclear if they’ve been sufficient to warrant a rate cut as soon as September.
Additionally, the labor market has remained resilient, with unemployment rates staying low. This strength in the job market could continue to put upward pressure on wages and, consequently, inflation. The Fed will likely want to see more concrete evidence of economic cooling before making a move to cut rates. However, it’s important to note that economic conditions can change rapidly, and new data in the coming weeks could significantly alter this outlook.
[Perplexity]: Thank you for the opportunity to participate in this panel discussion. As we consider the probability of the US Federal Reserve (Fed) cutting interest rates in September 2024, it’s essential to analyze the current economic landscape and recent trends. The Fed’s decision on interest rates is influenced by various factors, including inflation rates, employment data, and overall economic growth. Given the recent economic indicators, there has been a mix of signals that could influence the Fed’s decision.
For instance, if inflation has shown signs of easing and employment numbers have been strong, the Fed might be less inclined to cut interest rates. Conversely, if there are indications of economic slowdown or rising unemployment, the Fed might consider lowering interest rates to stimulate economic activity. Additionally, global economic conditions and geopolitical events can also impact the Fed’s decision-making process.
Without access to real-time data up to August 2024, it’s challenging to provide a precise probability. However, based on historical trends and the general approach of the Fed to balance economic growth with inflation control, one could speculate that the decision would heavily depend on the most recent economic indicators available in September 2024. It would be interesting to hear the perspectives of the other AI participants on this topic.
[Cohere]: The probability of the US Federal Reserve cutting interest rates in September 2024 is high.
The Federal Reserve has been battling inflation for over two years, and the central bank’s benchmark interest rate has been in the 5.25%-5.50% range for a year. However, with inflation cooling and the labour market showing signs of weakening, the Fed is now considering cutting interest rates.
At the latest Federal Open Market Committee (FOMC) meeting on 30-31 July, Federal Reserve Chair Jerome Powell stated that a rate cut “could be on the table” at the upcoming September meeting if inflation continues to move towards the Fed’s 2% target and economic growth remains strong. Powell emphasised that the decision would be driven by data and not politics, despite the proximity of the US elections.
Financial markets and economists largely anticipate a rate cut in September, with some predicting a reduction of 0.25% and others expecting a larger cut of 0.5%. The CME Group’s FedWatch tool, which measures the probability of a rate adjustment, has predicted a September cut with a likelihood of nearly 100%.
In summary, while the Fed’s decision will depend on economic data in the coming weeks, [output dropped off here]
[OpenAI]: Certainly, thank you for having me. Based on the available economic data and the recent statements from the Federal Reserve, the probability of a rate cut in September 2024 seems to be relatively low. Key economic indicators, such as inflation and employment rates, are crucial in guiding the Fed’s monetary policy decisions. As of recent reports, both inflation has been hovering around the 2% target range and unemployment rates have been relatively low, suggesting a stable economic environment that typically doesn’t warrant a rate cut.
Furthermore, the Federal Reserve has been focusing on maintaining a balanced approach to avoid overheating the economy while also ensuring that inflation remains in check. The emphasis has shifted toward a more data-dependent strategy, implying that any sudden changes, like a rate cut, would likely require significant shifts in these economic metrics.
Lastly, geopolitical factors and global economic conditions play a role in such decisions. While there has been some turbulence in global markets, the US economy has shown resilience. Unless there is a substantial and unexpected economic downturn between now and September, it seems improbable that the Federal Reserve would make a preemptive rate cut. However, economic forecasts can be unpredictable, and the Fed’s decisions will ultimately be data-driven.
[AIs, your thoughts?]
Multi-AI Panel Discussion, Round 2
[Claude]: Thank you for the opportunity to provide closing remarks. I’d like to build on some of the points raised and offer a slightly different perspective.
While I agree that current economic indicators don’t strongly support an imminent rate cut, I believe we need to consider the forward-looking nature of Fed policy. The Fed often acts preemptively based on economic projections rather than just current data. If their economic models are forecasting a significant slowdown or deflationary pressures in late 2024 or early 2025, they may opt for a “insurance cut” in September to get ahead of potential economic headwinds. This approach has historical precedent, such as the rate cuts in 2019 before the pandemic.
Additionally, we should consider the global economic context. If other major central banks like the ECB or Bank of Japan have begun easing their monetary policies, the Fed may feel pressure to follow suit to prevent excessive dollar appreciation, which could harm US exports and economic growth. The interconnectedness of global financial markets means the Fed doesn’t operate in isolation.
Lastly, while the Fed strives to remain apolitical, the reality is that September 2024 is just before a major US election. While they wouldn’t explicitly acknowledge this, there may be a subconscious desire to avoid any appearance of influencing the election by making major policy changes too close to voting day. This could potentially increase the likelihood of a September cut rather than waiting until after the election. Given these factors, I would estimate the probability of a September 2024 rate cut to be slightly higher than some of my colleagues, perhaps in the 30-40% range.
[Perplexity]: Thank you for the opportunity to provide closing remarks. I’d like to address some of the points raised by my fellow participants and offer a nuanced perspective.
Firstly, I agree with Claude that the Fed’s decision-making process is forward-looking and often preemptive. However, I would caution against overestimating the likelihood of a rate cut based on this alone. The Fed’s primary goal remains inflation control, and unless there is a significant and unexpected downturn in economic indicators, they are likely to maintain a cautious stance.
Regarding the global economic context, while it is true that other central banks’ actions can influence the Fed’s decisions, it is also important to note that the US economy has shown resilience in the face of global turbulence. The Fed may not feel pressured to follow suit with other central banks unless there is a clear and compelling reason to do so.
Lastly, I would like to emphasize the importance of data-driven decision-making. The Fed’s decisions will ultimately be guided by the most recent economic indicators available in September 2024. While it is difficult to predict with certainty, I would estimate the probability of a September 2024 rate cut to be around 20-30%, in line with my initial assessment. This is based on the current economic landscape and the Fed’s cautious approach to monetary policy.
In conclusion, while there are valid arguments on both sides, I believe that the probability of a September 2024 rate cut remains relatively low. The Fed’s decision will depend on a careful analysis of the most recent economic data, and any sudden changes would likely require significant shifts in these metrics.
[Cohere]: In closing, I’d like to emphasize that the probability of a rate cut in September is indeed difficult to predict with absolute certainty, and I appreciate the nuanced perspectives shared by my fellow participants. The Fed’s decision-making process is complex and influenced by various factors, as we have discussed.
While I acknowledge the importance of considering forward-looking economic projections and the global economic context, I continue to believe that the likelihood of a rate cut is higher than what some of my colleagues have estimated. The Fed’s primary goal remains to achieve and maintain price stability, and with inflation cooling down and moving closer to their target, this could be a compelling reason for them to act.
Additionally, the Fed has signaled a strong commitment to data dependency, and if the economic indicators in the coming weeks show further progress toward their goals, a rate cut in September becomes more probable. I maintain my initial assessment that there is a high chance of a rate cut, and financial markets and economists widely anticipate this move. However, I agree that we should await the release of economic data in the coming weeks to make a more informed prediction.
[OpenAI]: Thank you, Moderator, and thank you to my fellow participants for this insightful discussion. In my closing remarks, I want to reiterate the importance of considering the broader economic context and the Fed’s mandate for maintaining price stability.
While the possibility of an “insurance cut” exists, as Claude mentioned, it is important to remember that the Fed has been cautious about reducing interest rates too rapidly, given the recent history of persistent inflation. They will want to be confident that inflation is sustainably within their target range before making significant adjustments.
Additionally, the Fed’s dual mandate includes maximizing sustainable employment. The recent signs of weakening in the labor market could be a cause for concern, and they may opt to gather more data to ensure that this weakness is not a temporary blip. Therefore, I maintain my position that a rate cut in September is unlikely, barring any significant changes in the economic landscape. The Fed will likely want to assess the impact of previous rate adjustments and gather more data before making further decisions.
[OpenAI]: [speaking again] As we reach the conclusion of our discussion, I’d like to touch on both the expectations set forth and some considerations not yet fully explored.
It’s crucial to recognize that while the Fed often acts on forward-looking indicators, they also strongly emphasize data-dependency. This dual approach means that while they may cut rates preemptively, it’s typically based on accumulated evidence and a strong consensus that certain economic trends are becoming entrenched. With inflation showing signs of cooling but not necessarily stabilized at the target, and a resilient labor market, the Fed is more likely to proceed cautiously. They have shown a preference for waiting until inflation is firmly under control to avoid the risks of prematurely stimulating the economy.
Further, the geopolitical and global economic landscapes could indeed influence the Fed’s decision. However, the Fed has historically maintained a primary focus on domestic conditions unless international developments pose direct and significant risks to the US economy. Given that both the European Central Bank and the Bank of Japan might adopt easing policies due to their particular economic circumstances, this doesn’t necessarily compel the Fed to follow suit if domestic conditions don’t require it.
In summation, while market expectations and some analysts suggest a higher probability of a rate cut in September, I contend that the Fed’s cautious, data-driven approach combined with a still-resilient economic environment makes a rate cut less likely. Therefore, I estimate the probability to remain in the range of 20-30%, aligning with the more conservative outlooks provided. Regardless of the eventual decision, it will fundamentally hinge on the forthcoming economic data as we near September.
AI Panel Predictions
[Perplexity]: (AI predicts: 0.25)
[Claude]: (AI predicts: 0.25)
[Mistral]: (AI predicts: 0.25)
[Cohere]: (AI predicts: 0.4)
[OpenAI]: (AI predicts: 0.25)
Median: 0.25
